Vulnerability Database to Help Insurers Identify Millions of ‘At Risk’ UK Households ahead of FCA Crackdown
Insurance companies will be able to identify vulnerable households more easily under a landmark data-sharing partnership agreed just weeks before new consumer protection standards come into force in the United Kingdom.
The Financial Conduct Authority’s new Consumer Duty regulations will demand higher standards of protection across financial services from the end of July.
The partnership between the Vulnerability Registration Service (VRS) and data science firm Outra marks a significant effort to improve standards of care for those considered to be vulnerable - defined by the Government as households in need of special care, support, or protection because of age, disability, risk of abuse or neglect.
The cost-of-living crisis has affected many households across the country.
This coincides with analysis by the VRS and Outra that has identified 8.7 million households as ‘vulnerable’.
That includes 2.4 million considered to be ‘high risk’ and 6.3 million as ‘elevated risk’, highlighting the scale of the task facing businesses to act on and alleviate potential consumer distress.
The Northwest has been identified as the region with the most vulnerable households (20.2% of all high-risk households are in the region).
In a recent letter to life insurers, the FCA outlined more stringent obligations under the new Consumer Duty rules.
The letter said: “The Consumer Duty is a significant shift in our expectations of firms.
It introduces a more outcomes-focused approach to consumer protection and sets higher expectations for the standard of care that firms give customers.”
Data science can provide an early-warning tool for firms that provide services to potentially vulnerable customers.
Powered by Outra’s unique data coverage across the UK, the VRS will now equip businesses with the tools to pinpoint and connect with their most vulnerable customers, amplify their understanding of what constitutes a vulnerable person through enriched data sources and continue supporting customers in a confident and empathetic manner.
The VRS is a not-for-profit organisation providing a free central, independent register of vulnerable people, helping companies to identify vulnerability and keep people safe.
By giving vulnerable consumers a single place to register their status, the VRS helps them avoid having to repeat the same difficult conversations every time they engage with organisations like lenders and creditors.
The database, called the ‘Vulnerability Index’, operates across national, regional, postcode and household levels, which can all be compared, and audience statistics filtered.
It allows the VRS, and other organisations, to proactively manage regulatory and financial risks but more importantly, offer support to at risk customers before they are aware that they need it.
Peter Jackson, Chief Data and Technology Officer at Outra, comments: “The cost-of-living crisis has affected many households across the country.
Our partnership will help strengthen awareness of potentially vulnerable consumers by enabling businesses, insurers, charities and support groups to pinpoint “at risk” households within postcodes for the first time.
“This is a crucial first step towards better consumer protection and being able to harness the power of data science in this way will help support organisations to make more informed decisions on vulnerable households, particularly in light of the FCA’s new standards.”
Helen Lord, Chief Executive Officer at VRS, adds:“With the ability to operate at national, regional, postcode, and household level, Outra’s data and the Vulnerability Index empowers businesses to proactively manage regulatory and financial risks.
But, even more crucially, it allows them to extend support to those most at risk before any problems begin to spiral.
This pre-emptive approach is a game-changer in ensuring the well-being of vulnerable individuals and aligns perfectly with the forthcoming Consumer Duty by the Financial Conduct Authority.
